In simple terms: A portfolio of mostly unnamed corporate-action positions, with realisations concentrated in the second half. The 1966 workout book is included in the Buffett Partnership special-situations record with an evidence grade of A- - category totals directly reported; underlying cases mostly anonymous.

What Buffett saw

The 1966 record is a portfolio case rather than a single named security. Buffett reported the average capital and dollar gain, and noted that borrowing was normally assigned to workouts.

The year did not feel like a smooth 22.4% line on a chart. At mid-year, the workout book had earned only $16,112 on an average investment of $7.87 million. Most of the eventual annual gain arrived in the second half as transactions resolved.

How the situation was meant to work

This is what an event-driven portfolio does: it carries several positions while dates and approvals develop, then recognises cash in clusters. The return uses the average capital committed while those positions were alive, not the value of the book on one convenient day.

The first half was nearly flat, so much of the annual result came from later closings. This is a useful reminder that cash realisations cluster around deal calendars rather than arrive in a smooth monthly sequence.

The timeline, capital and risk

Capital disclosed: $7,666,314 average investment in workouts.

Time frame: 1966.

A reader should not mistake a portfolio result for a list of independently verified winners. The letters do not identify most underlying cases, and Buffett was already warning that greater scale and competition could reduce the supply of attractive spreads.

What happened

Outcome: A weak first half gave way to a strong second half.

What the return means - and the lasting lesson

Return record: $1,714,181 gain, or about 22.4% on average investment.

The relevant unit of analysis can be a book of transactions, but the return still needs a capital denominator and a timeline. A category figure is not evidence that every individual deal performed similarly.

This guide is educational information, not a recommendation, investment advice or a substitute for reading the underlying disclosure.